With the privatisation process of Air India (A-I) being put on hold, one of the first steps the civil aviation ministry is planning to undertake is a renegotiation of the wage and work practice contracts with its employee unions.
Top government officials told Business Standard that the existing contracts are "not very good and provide tremendous scope for better utilisation of the over 17,000 strong workforce."
"There are several distortions (in the wage structure) that need to be eliminated to cut costs and enhance productivity," said an official. He added the productivity-linked structure had proved to be a drain on the national carrier's bottomline.
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As part of the wage revision exercise, it is likely that the productivity-linked incentive (PLI) system would be dismantled and a graded cut in the salary structure introduced, officials pointed out.
The civil aviation ministry had last year appointed a task force to recommend measures including PLI, hourly rate of payment and shortfall, applicable to different categories of employees, to rationalise the emolument structure in A-I.
Senior A-I executives said the employee wage and work practice contracts have been due for renegotiations since December 1996. Various issues regarding PLI too remain to be settled with the employees, they said.
Wages of A-I employees were last revised in 1995 when the PLI concept was introduced. Thereafter, wages were due for revision in 1997. No decision, however, was taken in that regard.
The airline management had been postponing the negotiations due to the proposed divestment of government stake in the national carrier.
"The idea was to allow the freshly inducted strategic partner to draw up new contracts with A-I employees in line with its long-term business plans apart from offering a voluntary retirement scheme," the official said.
The wage bill is the second largest expenditure for A-I after the fuel charges. The payments and provisions for employees including crew allowances for the airline amounted to Rs 966.95 crore during 2000-01. While A-I has 403 pilots (executive and non-executive), it has 2,612 general category officers and 8,095 non-technicians.